Having a university degree, according to the latest research, increases your earning power over a lifetime of work.
And it’s always been assumed that there is a pecking order on where that degree was earned. The older, more established universities are seen as more prestigious and therefore come with better job prospects and earning power.
The competition to win a place is intense. The scores needed for some degrees at these universities are very high. For example, an ATAR score of 99.5% is needed to get into Commerce/Law at the University of Sydney, or about the nearest you can get to a perfect score.
However, analysis using the latest HILDA (Household, Income and Labour Dynamics in Australia) survey from the University of Melbourne indicates that we may be assuming too much.
The data suggests that the so-called sandstone universities, which call themselves the Group of Eight (Go8), aren’t ahead of the rest when it comes to pay. Those eight are: Monash University, ANU, UNSW and the universities of Adelaide, Melbourne, Queensland, Sydney and Western Australia.
The analysis of HILDA data indicates an earnings premium attached to Australian Technology Network and Innovation Research University universities, ahead of Go8.
These two groupings are defined as:
The Australian Technology Network (ATN): Curtin University of Technology, University of South Australia, RMIT University, University of Technology Sydney and Queensland University of Technology. They have a common focus on the practical application of tertiary studies and research.
Innovative Research Universities (IRU): Flinders University, Griffith University, La Trobe University, Murdoch University, James Cook University and Charles Darwin University. They were all founded in the 1960s and 1970s as research universities.
According to the analysis, there’s a premium of about 15% for the highest qualification from an IRU university compared to a Go8 university. And for an ATN university, it’s 10%.
The author of the report, Roger Wilkins, of the the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne, wasn’t expecting these results.
“It is perhaps surprising that graduates of the Go8 universities do not have the highest (conditional) earnings,” Wilkins writes.
The answer could be in the degrees themselves. Graduates from ATN and IRU universities have a greater focus on vocational fields.
And the data used in the analysis of HILDA is restricted to full-time employees. It could be that those with degrees from Go8 universities are more likely to become self-employed high-earner and employers rather than employees.
The Go8 universities think the findings are suspect.
“We absolutely question the veracity of the methodology adopted,” says Go8 Chief Executive Vicki Thomson. “When results are so very different from everything that has gone before, even when using the same survey data, surely some explanation is required, especially in a sector that lives and dies by the rigor of its research.”
But what is clear is that having a degree improves the chances of have a job and one with increased earnings.
Australian Bureau of Statistics figures for May 2014 show just 3.2% of bachelor degree graduates are unemployed compared to 3.4% in 2013. The May 2014 unemployment rate for those without post-school qualifications was 8.2%.
In 2014, the median starting salary for bachelor degree graduates was unchanged at $52,500, according to Graduate Careers.
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